Tag / Brexit

The past decade has witnessed a sudden uptick in secessionist movements in Europe. The uptick started on the western side of the continent with the 2009 Belgian elections, where the New Flemish Alliance emerged as the largest party in the country; further to the east, we might point to the Russian invasion and partition of Georgia. Flemings, Abkhazians, and South Ossetians rarely fall in the same category for analysis. Nevertheless, there is something they have in common that warrants exploration. Moreover, that something is shared by the Scots, the Catalans, and the Russian-speakers in Crimea and the Donbass region.

The British government faced another crisis in the House of Commons this week over Brexit, having found a way to stave off the crisis it faced the week before. Both the country and its political parties appear deeply divided over whether the remain in the European Union or to leave. As we know from the June 2016 referendum, the ‘leave’ voters have a narrow majority. The ‘remain’ voters lost. And while the facts on the ground appear to point inexorably toward a British exit, the choice is still far from settled. The reason for this indecisiveness is fundamental. As the British have learned over the two years, Brexit is about more than just their relations with Europe. It is about who makes decisions in a liberal democracy.

The United Kingdom’s exit from the European Union (EU) creates new opportunities for Europeans to unite around a common vision. The British played an important role in Europe both as a common market and as a political union. The challenge for the remaining member states will be to adapt to Great Britain’s absence. Last autumn, French President Emmanuel Macron launched an ambitious raft of proposals for reenergizing the European project. More recently, German Chancellor Angela Merkel forged a grand-coalition government with a different pro-European agenda. Macron’s vision is more centralist and involves more institutionalized solidarity; Merkel’s vision is more intergovernmental and places more emphasis on political responsibility at the national level. The success of either approach will depend upon how other European member states respond to the call for unity. The next Italian government will play a critical role.

There a strong presumption that a rejuvenated Franco-German relationship can relaunch the European project. That presumption is inaccurate. The problem is not that Emmanuel Macron has too much on his plate domestically or that Angela Merkel did not get the electoral results she (and Macron) might have wanted. The major constraint on a Franco-German relaunching of Europe is not even that the French and Germans disagree on fundamental issues related to reforming macroeconomic governance in the euro area. Rather, the reason a new partnership between France and Germany is not going to relaunch the European project is that Europe is not the same.

To understand what impact the Trump Administration will have on European economic performance you have to start by re-examining the lessons of the past. Almost 50 years ago, Richard Cooper published a ground-breaking book in the United States called: The Economics of Interdependence. He conceived this book during the early 1960s while he was working as an economic policymaker in the Kennedy and Johnson Administrations, and he developed the argument as part of a high-level study group within the Council on Foreign Relations. These details are important because the message Cooper had to communicate was controversial, particularly coming from a member of the foreign policy establishment. No country, he argued, not even the United States, can ignore how other countries react to their economic policies. The problem is not good diplomacy (or good manners). It is structural. If policymakers ignore how other countries react to what they do, then they will never achieve their objectives – because the reactions of others can do much to offset any benefits a discrete policy action may deliver. Indeed, a country will be worse off going it alone than working with others. Compromise and cooperation are always better than having countries set their economic policies at cross-purposes.

The Belgian economist André Sapir used a background paper for the September 2005 informal summit of the European Union’s economic and finance ministers to make a provocative claim about the European social model: Europe’s heads of state and government do not need to choose between equity and efficiency or between a welfare state and a market economy; with the right reforms to welfare programs and market institutions, it is possible to have both equity and efficiency at the same time. The British held the rotating presidency of the Council of the European Union and were quick to take up Sapir’s challenge. The quest to achieve both equity and efficiency moved to the heart of efforts to relaunch the Lisbon Strategy and to re-energize the European project. Unfortunately, these efforts were soon overtaken by events.

The upsurge of populism in the United States and Europe has us asking the wrong questions. The issue that should concern us is not what populists have in common. The similarities between Donald Trump and Marine Le Pen or Nigel Farage are unimportant. We also should stop wondering why voters on both sides of the Atlantic are so easily beguiled by political messages that combine rejection of the ‘establishment’ with some kind of appeal to identity politics. There has never been a shortage of voices calling for the overthrow of the elite or disgruntled voters willing to follow them and any slogan that promises that a history of victimhood can be replaced wth a future of privilege is always going to be attractive. Such mobilization against ‘the system’ is a hardy perennial of democratic politics.